On October 13, President Trump announced that he would no longer certify to Congress that the suspension of U.S. sanctions against Iran pursuant to the Joint Comprehensive Plan of Action (“JCPOA”) is “appropriate and proportionate” to the steps that Iran has taken to terminate its illicit nuclear program. The President’s much-anticipated announcement does not mean that the United States is withdrawing from the JCPOA, nor does it automatically result in the re- imposition of any U.S. sanctions against Iran. Rather, the President’s announcement gives the Congress 60 days to introduce legislation to re-impose U.S. sanctions that could be considered under expedited procedures. Importantly, although President Trump did not call on Congress to re-impose the pre-JCPOA U.S. nuclear-related sanctions, he did threaten to terminate U.S. participation in the JCPOA in the future if Congress and U.S. allies do not take action to address perceived flaws in the agreement.

At the same time, the Trump Administration expanded sanctions against Iran’s Islamic Revolutionary Guard Corps (“IRGC”), and designated four additional entities for sanctions for their support of Iran’s weapons proliferation activities. Further, Senators Bob Corker and Tom Cotton announced that they would be introducing legislation to address perceived shortcomings in the JCPOA, consistent with President Trump’s request.

The developments of late last week follow several other recent changes in U.S. sanctions involving Russia and Sudan.

On September 29, the Trump Administration, as expected, revised key aspects of the U.S. sectoral sanctions against Russia relating to dealings in debt of certain parties operating in Russia’s financial services and energy sectors. The move was required by the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) discussed in our alert of July 28, 2017.

Finally, on October 12, the Trump Administration terminated most U.S. sanctions against Sudan, which had been substantially suspended since January 2017 pursuant to an Executive Order that President Obama issued in the waning days of his Administration.

IranFailure to Make INARA Certification

The Iran Nuclear Agreement Review Act of 2015 (“INARA”) requires that the President certify to Congress every 90 days that: (1) “Iran is transparently, verifiably, and fully implementing” the JCPOA; (2) Iran has not committed a material breach with respect to the JCPOA, or if it has committed a material breach, then it has cured that breach; (3) Iran has not taken any action that could significantly advance its nuclear weapons program; and (4) suspension of U.S. sanctions against Iran in connection with the JCPOA is “appropriate and proportionate” to the specific and verifiable measures taken by Iran with respect to terminating its illicit nuclear program and is “vital to the national security interests of the United States.”

In refusing to make this certification to Congress, which was due on October 15, President Trump explained that he does not believe that the suspension of U.S. sanctions against Iran is “appropriate and proportionate” to Iran’s steps to terminate its illicit nuclear program. As spelled out in our prior alert, in January 2016, the United States and the European Union both significantly eased their sanctions against Iran, following verification by the International Atomic Energy Agency (“IAEA”) that Iran had carried out its commitments under the JCPOA. Specifically, the United States revoked or waived—but did not eliminate entirely—most of its secondary sanctions, which target non-U.S. companies not owned or controlled by U.S. persons that engage in certain Iran-related activities. By contrast, the primary U.S. sanctions that prohibit U.S. persons1 and their owned or controlled non-U.S. affiliates from engaging in virtually any dealings with Iran (absent U.S. government authorization) remained in place, though the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) did issue a general license broadly authorizing non-U.S. entities owned or controlled by U.S. persons to engage in Iran-related activities, subject to certain limitations.

The President’s refusal last week to certify Iran’s compliance does not mean that the United States is withdrawing from the JCPOA at this time, or that U.S. sanctions against Iran that have been suspended under the JCPOA will necessarily be re-imposed. Rather, as provided in INARA, the failure to certify opens an expedited pathway for Congress to decide whether to reinstate some or all of the suspended statutory sanctions. Specifically, INARA provides that legislation to reinstate U.S. sanctions introduced in the House of Representatives or the Senate by the Majority or Minority Leader of either chamber within 60 days of the non-certification shall be entitled to consideration under expedited procedures that effectively guarantee a floor vote in each chamber.

Of course, Congress could act at any time under its ordinary procedural rules to reinstate the U.S. sanctions that have been suspended pursuant to the JCPOA, regardless of whether or not the President made the INARA certification. Likewise, regardless of whether or not he made the INARA certification, President Trump could take action on his own to re-impose any or all of the U.S. sanctions that have been suspended pursuant to the JCPOA by simply revoking the presidential waivers of such sanctions or imposing sanctions under new Executive Orders. Indeed, President Trump will have to decide by mid-January 2018 whether to continue much of the Iran sanctions relief under the JCPOA, as the presidential waivers for many of the suspended sanctions expire then. If President Trump elects not to renew those sanctions waivers, then at least some U.S. sanctions that were suspended pursuant to the JCPOA would be reinstated, and the United States would certainly be in breach of the JCPOA.

Importantly, President Trump did not call on Congress to reinstate the U.S. sanctions that were suspended pursuant to the JCPOA, and early indications are that Congress does not intend to reinstate such sanctions. Rather, President Trump called on Congress and U.S. allies to address certain perceived flaws in the JCPOA, and he threatened to withdraw the United States from the agreement altogether if they fail to do so.

Corker-Cotton Legislation

Consistent with President Trump’s request, Senators Bob Corker and Tom Cotton announced on October 13 that they would be introducing legislation to address perceived flaws in the JCPOA.

The text of the Corker-Cotton legislation is not yet publicly available, but a fact sheet issued by Senators Corker and Cotton indicates that the legislation would seek to automatically re-impose U.S. sanctions (presumably meaning those U.S. sanctions that were suspended pursuant to the JCPOA) if Iran gains the capability to produce a nuclear weapon within a one-year “breakout” period at any time in the future. Specifically, as described to date, the Corker-Cotton legislation would:

Reinstate U.S. sanctions notwithstanding the JCPOA’s sunset provisions, should Iran utilize the flexibility the JCPOA affords to it to ramp up its nuclear program when those provisions kick in. As described in our July 2015 alert, the sunset provisions provide that most JCPOA restrictions on Iran’s activities pertaining to uranium enrichment, heavy water accumulation, and spent fuel reprocessing terminate after 10-15 years;

Seek to enhance the inspection authorities of the IAEA, which works to verify Iran’s compliance with the terms of the JCPOA; and

Seek to further limit Iran’s advanced centrifuge program.

Since the JCPOA is a multilateral agreement, the United States does not have the ability to change it without the consent of all of the other signatories, including Iran, China, and Russia. Early indications are that U.S. allies who also are signatories to the JCPOA (France, the United Kingdom, and Germany) are willing to work with the United States to address Iran’s ballistic missile and terrorism activities, but there does not appear to be any appetite for seeking to amend the JCPOA.

IRGC and Other Sanctions Designations

Also on October 13, OFAC expanded the sanctions against the IRGC. Specifically, the IRGC—which the United States already had designated on its List of Specially Designated Nationals and Blocked Persons (“SDN List”) for weapons proliferation and human rights- related reasons—now is also designated for its support of terrorism-related activities.

The terrorism-related designation of the IRGC was required to be made by October 31 pursuant to CAATSA Section 105 and, as a legal matter, is largely symbolic. Prior to this designation, the property and interests in property of the IRGC (and its officials, agents, and affiliates) that were in, or came into, the United States or the possession or control of a U.S. person were required to be blocked, and it already was prohibited for U.S. persons and their owned or controlled non-U.S. affiliates to engage in virtually any dealings with the IRGC or any entities 50 percent or more owned by the IRGC.

Further, non-U.S. persons already were exposed to U.S. secondary sanctions if they: (1) knowingly and materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the IRGC or any of its officials, agents, or affiliates whose property is blocked; (2) knowingly engaged in a significant transaction with the IRGC or any of its officials, agents, or affiliates whose property is blocked; or (3) knowingly facilitated a significant transaction or provided significant financial services for the IRGC or any of its agents or affiliates whose property is blocked.

The designation of the IRGC for its support of terrorism-related activities does not alter these restrictions. However, as explained in guidance issued by OFAC on October 13, the designation of the IRGC for its support of terrorism means that the so-called “Berman exemptions” under the International Emergency Economic Powers Act relating to personal communications, humanitarian donations, information or informational materials, and travel are no longer available with respect to U.S.-person dealings with the IRGC.

Additionally, OFAC designated for sanctions three Iranian entities (Shahid Alamolhoda Industries, Rastafann Ertebal Engineering Company, and Fanamoj) and one Chinese entity (Wuhan Sanjiang Import and Export Co. LTD) for supporting Iran’s weapons proliferation activities. As a result of these designations, the property and interests in property of the designated entities that are in, or that come into, the United States or the possession or control of a U.S. person must be blocked, and U.S. persons are precluded from virtually any dealings with the designated entities or entities 50 percent or more owned by them (or other SDNs). Further, non-U.S. persons could be exposed to U.S. secondary sanctions if they knowingly provide significant financial, material, technological, or other support to, or goods or services in support of, any activity or transaction on behalf of or for the benefit of the designated entities.

Russia

On September 29, OFAC made the following revisions to key aspects of the U.S. sectoral sanctions targeting Russia, as required by Section 223 of CAATSA and explained in our July 2017 alert:

Directive 1. OFAC Directive 1 currently prohibits U.S. persons from dealing in new debt of longer than 30 days maturity or new equity of sectorally sanctioned Russian banks (and entities 50 percent or more owned by one or more such banks). Effective November 28, U.S. persons will be prohibited from dealing in new debt of longer than 14 days maturity or new equity of such sectorally sanctioned Russian banks and entities 50 percent or more owned by one or more such banks.

Directive 2. OFAC Directive 2 currently prohibits U.S. persons from dealing in new debt of longer than 90 days maturity of certain sectorally sanctioned Russian energy companies (and entities 50 percent or more owned by one or more such energy companies). Effective November 28, U.S. persons will be prohibited from dealing in new debt of longer than 60 days maturity of such sectorally sanctioned Russian energy companies and entities 50 percent or more owned by one or more such energy companies.

Notably, Section 223 of CAATSA also requires OFAC, by October 31, to expand the existing sectoral sanctions prohibitions (in OFAC Directive 4) relating to deepwater, Arctic offshore, or shale exploration or production projects that have the potential to produce oil in or offshore Russia and involve certain Russian energy companies to reach such new projects anywhere in the world if certain conditions are met. OFAC has not yet issued this revision, which will take effect 90 days after its issuance.

Sudan

Finally, on October 12, OFAC announced that it was terminating most U.S. sanctions against Sudan. As described in our prior alert, the Obama Administration suspended most U.S. sanctions against Sudan in January 2017 in response to “positive actions” that the Government of Sudan had taken in the areas of counterterrorism and security cooperation, a reduction in offensive military activity, cooperation on addressing regional conflicts, and efforts to improve access for humanitarian assistance.

Specifically, as has been the case since the U.S. sanctions were suspended in January, U.S. persons are not prohibited from engaging in trade and other business dealings with Sudan, and the property and interests in property of the Government of Sudan (and any entity owned or controlled by the Government of Sudan) that come into the United States or the possession or control of a U.S. person are not required to be blocked, subject to the following key exceptions:

Agricultural Commodities, Medicine, and Medical Devices. Notwithstanding the termination of most U.S. sanctions against Sudan, the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”) still requires authorization from OFAC to export and reexport to Sudan agricultural commodities, medicine, and medical devices as a result of Sudan’s inclusion in the State Sponsor of Terrorism List. To address this statutory requirement, OFAC has issued a general license authorizing the export and reexport of agricultural commodities, medicine, and medical devices to Sudan (or to a person in a third country purchasing specifically for resale to Sudan), provided that: (1) the exports and reexports are shipped within the 12-month period beginning on the date of the signing of the export or reexport contract; (2) the items are not exported or reexported to persons whose property and interests in property are blocked; and (3) the export and reexport complies with U.S. export control laws and regulations.

Commodities, Software, and Technology Identified on the Commerce Control List. The termination by OFAC of most U.S. sanctions against Sudan does not impact U.S. export controls relating to Sudan that are administered by the U.S. Commerce Department. Specifically, a Commerce Department authorization continues to be required for any person (whether or not a U.S. person) to export, reexport, or transfer to or within Sudan any items that are subject to the U.S. Export Administration Regulations (“EAR”)2 and that are identified on the EAR’s Commerce Control List (i.e., are classified other than EAR99). In many cases, applications for authorization to export or reexport such items to Sudan are subject to a policy of denial. However, in January 2017, the U.S. Commerce Department announced that it would apply a general policy of approval of applications to export or reexport to Sudan items intended to ensure the safety of civil aviation and for railroad construction and repair.

South Sudan and Darfur. The termination of most U.S. sanctions against Sudan does not impact the separate U.S. sanctions programs relating to South Sudan and Darfur. Individuals and entities that have been added to the SDN List pursuant to the U.S. sanctions relating to South Sudan and Darfur remain on the SDN List. U.S. persons are prohibited from engaging in virtually any dealings with such individuals and entities, and their property and interests in property that are in, or that come into, the United States or the possession or control of a U.S. person still must be blocked.

_______________________1/ U.S. persons are: (1) U.S. citizens and U.S. lawful permanent residents (i.e., “green-card” holders) regardless of location or employer; (2) any entity organized under the laws of the United States or of any jurisdiction within the United States (including foreign branches of such an entity) and their employees; and (3) persons within the United States (even if only on a temporary basis).

2/ In this context, items subject to the EAR are: (1) items in the United States or moving in transit through the United States; (2) U.S.-origin items; (3) non-U.S.-origin items that incorporate more than 10 percent U.S.-origin content (by value) controlled for Sudan; (4) certain foreign-made direct products of U.S.-origin technology or software; and (5) certain commodities produced by any non-U.S. plant or major component of a non-U.S. plant that is the direct product of certain U.S.-origin technology or software. Defense items controlled by the International Traffic in Arms Regulations (“ITAR”) also cannot be exported or reexported to Sudan without State Department authorization, which in most cases would be denied.

]]>United States, EU Implement Significant Iran Sanctions Reliefhttps://www.globalpolicywatch.com/2016/01/united-states-eu-implement-significant-iran-sanctions-relief/
Tue, 19 Jan 2016 20:30:36 +0000http://www.globalpolicywatch.com/?p=2888Continue Reading]]>On January 16, 2016, the United States and the European Union (“EU”) significantly eased their sanctions against Iran, following verification by the International Atomic Energy Agency (“IAEA”) that Iran had carried out its commitments under the Joint Comprehensive Plan of Action (“JCPOA”), the multilateral agreement signed in mid-July 2015 in which Iran agreed to accept certain limitations on its nuclear program.

Specifically, the United States dramatically reduced—but did not altogether eliminate—its “secondary” sanctions, which target non-U.S. companies not owned or controlled by U.S. persons that engage in certain activities in or involving Iran. In contrast, and as expected, the “primary” U.S. sanctions that prohibit U.S. persons and their owned or controlled non-U.S. affiliates from engaging in virtually any dealings with Iran (absent U.S. government licensing) will remain in place. Significantly, however, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued general licenses and a statement of licensing policy that ease certain aspects of these “primary” U.S. sanctions.

Most notably, OFAC issued a general license that broadly authorizes non-U.S. companies owned or controlled by U.S. persons to trade and otherwise deal with Iran, subject to certain continuing restrictions on the involvement of U.S. persons and the provision of U.S.-regulated goods and technologies. The OFAC general license also authorizes U.S. persons to engage in activities related to the establishment or alteration of policies and procedures of a U.S. company or its owned or controlled non-U.S. subsidiaries to the extent necessary to allow the non-U.S. subsidiaries to engage in otherwise newly permissible dealings with Iran. The general license also permits U.S. parent companies to make available to their non-U.S. subsidiaries certain automated and globally integrated information technology systems necessary to process documents or information related to the non-U.S. subsidiaries’ permissible Iran-related dealings.

Additionally, consistent with the JCPOA, the United States removed more than 400 Iranian individuals and entities from its various sanctions lists, including the List of Specially Designated Nationals and Blocked Persons (“SDN List”). As a general matter, U.S. persons and their owned or controlled non-U.S. subsidiaries still cannot deal with parties that remain on the SDN List (or entities owned 50% or more, individually or in the aggregate, by one or more SDNs) absent U.S. government licensing, and dealings with SDNs also may give rise to the imposition of various secondary sanctions that remain in place.

Further, on January 17, in a move underscoring that the sanctions relief implemented pursuant to the JCPOA was related only to Iran’s decision to curtail key aspects of its nuclear program, OFAC designated 11 individuals and entities involved in procurement on behalf of Iran’s ballistic missile programs. These new designations come in the wake of ballistic missile tests conducted by Iran in October and November 2015.

Finally, as expected, the EU has eased its Iran sanctions program to a much more substantial extent than the United States. Although a number of key EU restrictions remain in place, the EU has now removed most of its Iran sanctions program, including asset freezing measures against a number of major Iranian financial institutions and oil/gas companies, energy sector investment and related trade controls restrictions, notification / authorization requirements for certain transfers of funds to or from Iranian parties, and prohibitions against the provision of insurance and other financial services to Iranian parties.

]]>Prospects for Iran Sanctions Under the April 2 Nuclear Frameworkhttps://www.globalpolicywatch.com/2015/04/prospects-for-iran-sanctions-under-the-april-2-nuclear-framework/
Tue, 14 Apr 2015 18:24:38 +0000http://www.globalpolicywatch.com/?p=2363Continue Reading]]>There are no changes in the application of US sanctions against Iran as a result of the framework parameters regarding Tehran’s nuclear program announced on April 2. Additional sanctions relief will come only if there is a final agreement concluded among Iran, the United States, the United Kingdom, France, Russia, China, Germany, and the European Union. The parties are aiming to reach such a final agreement by June 30.

Even if a final agreement is reached, there are several important issues with respect to the application of US sanctions that are not spelled out in the parameters circulated on April 2 by the US government and that will need to be addressed in any final agreement.

First — the timing of any sanctions relief. The parameters circulated by the US government state that sanctions will be suspended “after the IAEA has verified that Iran has taken all of its key nuclear-related steps.” Secretary of State John Kerry has stated publicly that it could take Iran as long as a year after the signing of a final agreement before it will be able to begin to comply with the key nuclear-related steps that would allow for sanctions relief. While the Joint Statement issued April 2 by the EU High Representative and the Iranian Foreign Minister also tied sanctions relief to “IAEA-verified implementation by Iran of its key nuclear commitments,” the statement noted that such relief would come “simultaneously” with such IAEA verification, not “after.” Moreover, subsequent to the announcement of the framework, some Iranian officials, including the supreme leader Ayatollah Khamenei, have suggested that sanctions relief must be comprehensive and immediate upon the execution of a final agreement. However, Obama Administration officials have emphasized that any additional sanctions relief for Iran will be “phased.” Accordingly, it seems unlikely, at least from the US side, that there will be any significant sanctions relief upon signing of a final agreement beyond that already agreed and implemented as part of the 2013 interim agreement, which, absent an extension, will expire June 30.

Second, whether sanctions will be terminated or, instead, suspended with the ability to snap back into place if Iran fails to meet its commitments. While the US parameters document states that U.S. and EU nuclear-related sanctions will be suspended with the ability for them to snap back, the Joint Statement by the EU High Representative and the Iranian Foreign Minister stated that the EU nuclear-related sanctions would be “terminated” and the US would “cease the application” of its nuclear related sanctions.

Third, whether Congress will impose new limitations on the President’s ability to ease U.S. sanctions targeting Iran. Today, the Senate Foreign Relations Committee is marking up legislation―the Iran Nuclear Agreement Review Act― that, as currently drafted, would prohibit the President for 60 days following the conclusion of a final nuclear agreement with Iran from waiving, suspending, reducing, providing relief from, or otherwise limiting the application of statutory sanctions targeting Iran (other than those already eased as part of the 2013 interim agreement). The legislation under consideration also would prohibit the President from taking any action to ease statutory sanctions even after this initial 60-day period if a joint resolution disapproving any final nuclear agreement with Iran is enacted during the initial 60-day period. To take effect, such a joint resolution likely would require a Congressional super-majority to override a presidential veto.

Fourth, what specific US sanctions will be suspended if there is a final agreement. The US parameters document makes clear that only the US nuclear-related sanctions would be suspended; the US sanctions against Iran relating to Iran’s terrorism, human rights abuses, and ballistic missiles will remain in place.

The US parameters document does not spell out which sanctions the United States government believes relate to terrorism and which relate to Iran’s nuclear program. Importantly, however, it does not appear that any nuclear-related agreement with Iran would remove the restrictions that prohibit US persons and their owned or controlled non-US affiliates from engaging in virtually all unlicensed dealings with or involving Iran. The restrictions on US persons doing business with Iran, which date back to the mid-1990s, were adopted as a result of Iran’s support for terrorism activities, not specifically in connection with Iran’s nuclear program. And although the expansion of these restrictions to reach activities of non-US companies owned or controlled by US persons occurred only in 2012, it is far from clear that this expansion would be treated as a “nuclear-related” sanction.

The Joint Statement of the EU High Representative and the Iranian Foreign Minister supports the view that the direct US sanctions that prohibit US persons and their owned or controlled non-US affiliates from doing business with Iran will not be suspended by any final nuclear-related agreement. Specifically, the Joint Statement said that the United States would cease the application of its “nuclear related secondary economic and financial sanctions.”

“Secondary sanctions” is the term that is generally used to refer to those retaliatory measures that the United States imposes against non-US persons that engage in certain activities involving Iran. These sanctions, which have been significantly expanded since 2010 in various statutes and executive orders, have primarily targeted Iran’s energy, shipping, and financial sectors. If the United States ceases to implement these secondary sanctions, then non-US persons that are not owned or controlled by US persons would not risk losing their access to US markets if they engage in activities currently targeted for such secondary sanctions. This might include, for example, the ability to:

supply Iran with precious metals and other materials such as aluminum and steel, and

provide insurance and underwriting services for various Iran-related activities.

If there is a final agreement, non-US financial institutions also would be expected to be able to support activities involving Iran that are no longer targeted for secondary sanctions and to re-engage with many Iranian financial institutions―though not those designated on the US List of Specially Designated Nationals and Blocked Persons as a result of their involvement in Iran’s terrorism activities.

Not all secondary sanctions may be considered nuclear-related, however. For example, the secondary sanctions that target investments above certain monetary thresholds in the development of Iran’s petroleum resources have been in place since the enactment of the Iran Sanctions Act of 1996 (ISA). The Findings to the ISA make clear that it was adopted in response to terrorism and weapons proliferation concerns. As enacted in 1996, the ISA targeted investments in Iran’s development of its “petroleum resources,” a term it defined as including only petroleum and natural gas. Pursuant to the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, however, the term “petroleum resources” was expanded to cover not only petroleum and natural gas, but also oil or liquefied natural gas, oil or LNG tankers, products used to construct or maintain pipelines used to transport oil or LNG, and refined petroleum products, including gasoline. In addition, many of the secondary sanctions that have been adopted since 2010 have been enacted as amendments to the ISA. So it is unclear which, if any, of these secondary sanctions will be suspended.

Even if the ISA secondary sanctions are suspended, there is a risk that previously sanctionable investments could again be targeted for sanctions if Iran violates its commitments and the secondary sanctions “snap back”. The United States does not usually grandfather existing projects when it imposes sanctions, and often provides for only limited wind-down periods.

In conclusion, even if there is a final agreement addressing Iran’s nuclear program by June 30, we will have to await further clarification from the US government as to which US sanctions will be suspended and the timing of any such suspension. However, it appears to be unlikely that any such agreement will ease the prohibitions on US persons and their owned or controlled non-US affiliates doing business with or involving Iran.

]]>Coordinated EU and U.S. Sanctions Target the Russian Financial, Energy, and Defense Sectorshttps://www.globalpolicywatch.com/2014/07/coordinated-eu-and-u-s-sanctions-target-the-russian-financial-energy-and-defense-sectors/
Thu, 31 Jul 2014 14:23:16 +0000http://www.globalpolicywatch.com/?p=1367Continue Reading]]>On July 29, the EU and United States took coordinated steps to expand sanctions targeting the Russian financial services, energy, and defense sectors, including restrictions on energy-related exports to Russia. The EU also took steps to limit certain types of trade and investment in Crimea, while both the EU and United States identified additional parties subject to asset-freezing measures. These new measures have broad implications for trade and investment activities in the region, and Russia is threatening to retaliate against U.S. and EU firms.

Specifically, the Council of the European Union (“EU Council”) agreed to impose a range of import and export restrictions relating to arms, dual-use goods and technologies, as well as certain equipment and technologies for the Russian oil industry that are not classified as dual-use items. Those restrictions will apply only to new contracts and will be implemented by a Council Regulation expected to be published late in the day today. Separately, the EU Council prohibited buying and selling certain new bonds, equity, or similar financial instruments issued by Russian state-owned banks; this prohibition is similarly expected to be published later today.

The EU Council also agreed to restrictions on new investment in infrastructure projects in Crimea and Sevastopol in the transport, telecommunications, and energy sectors and in relation to the exploitation of oil, gas and minerals. Those new measures also prohibit the export to Crimea of key equipment for the same six sectors as well as related finance and insurance services. They are included in Council Regulation 825/2014 and were published late in the day yesterday.

Finally, also yesterday, the EU published Council Regulation 826/2014, which designated 8 additional persons and 3 entities as subject to asset-freezing measures. Together with the new designations published on July 25, 2014, this brings the number of designated parties to 95 persons and 23 entities.

In the United States, the Commerce Department’s Bureau of Industry and Security (“BIS”) announced a new policy of denying exports, reexports, and foreign transfers of certain items –including certain items that do not currently require a BIS license – for use in Russia’s energy sector in the exploration or production from deepwater, Arctic offshore, or shale projects that have the potential to produce oil.

The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) also added three Russian banks – Bank of Moscow, Russian Agricultural Bank, and VTB Bank OAO – to its recently announced Sectoral Sanctions Identifications List (“SSI List”), limiting certain new debt and equity transactions with these banks and entities owned 50% or more by them. These additions to the SSI List come just one day after OFAC provided guidance on the application of the new sectoral sanctions.

Both BIS and OFAC also targeted United Shipbuilding Corporation – the largest shipbuilding company in Russia, which designs and constructs ships for the Russian Navy – for comprehensive restrictions, including full asset-blocking and restrictions on trade in U.S.-regulated items by any person (including non-U.S. persons) with that company.

Whether additional EU or U.S. sanctions will be forthcoming likely will depend on how events unfold on the ground in eastern Ukraine. Notably, U.S. Treasury Secretary Jacob Lew issued a statement on July 29 in which he indicated that the United States is “prepared to take additional actions if Russia does not take steps to resolve” the Ukraine crisis.

The new EU and U.S. measures have not gone unanswered by Russia. Press reports indicate that Russian lawmakers, in apparent retaliation against the new EU and U.S. sanctions, have taken steps to bar imports of certain European goods and are considering submitting a bill to the Duma that would further target U.S. and European companies with investments in Russia. Specifically, Russian lawmakers have already reportedly banned most fruit and vegetable imports from Poland and have threatened to extend that ban to other European countries. Press reports also indicate that lawmakers have proposed to bar U.S. accounting and consulting firms from doing business in Russia and to restrict imports of chicken from the United States.